Overview

Euro-area inflation fell unexpectedly to an annual rate of 2.5% in July. In June prices were 2.7% higher than a year earlier. The European Central Bank has twice raised interest rates this year to return inflation to its target of just under 2%.

The seasonally adjusted unemployment rate in Italyfell slightly to 8% in June, the lowest level in more than a year. But the number of people employed has not changed for three months, suggesting the fall is due to a decline in jobseekers not stronger hiring.

Switzerland made an unscheduled cut to interest rates to arrest appreciation of the Swiss franc, which had reached record levels against the euro. The Swiss National Bank said it would aim for a three-month Libor “as close to zero as possible”. It also said it is willing to increase the supply of francs to money markets to counter the “massively overvalued” franc.

Consumer prices in South Korearose by 4.7% in the year to July, up from a 4.4% increase in the year to June, adding to pressure on the Bank of Korea to raise the base interest rate, which stands at 3.25%.

Brazil's monthly trade surplus shrank unexpectedly to $3.1 billion in June, the first drop for six months. Imports fell as aggressive monetary tightening reduced consumer demand, but exports fell more as a strong currency continues to hurt competitiveness. Growth in industrial production is also decelerating, slowing to 0.9% year-on-year in June compared with 2.7% in May.